ADJ Contracting Pty Ltd
[2011] FWA 2380
•28 APRIL 2011
Note: An appeal pursuant to s.604 (C2011/4401) was lodged against this decision - refer to Full Bench decision dated 11 October 2011 [[2011] FWAFB 6684] for result of appeal.
[2011] FWA 2380 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
ADJ Contracting Pty Ltd
(AG2011/364)
SENIOR DEPUTY PRESIDENT ACTON | MELBOURNE, 28 APRIL 2011 |
ADJ Contracting Pty Ltd Enterprise Agreement 2010-2014.
Introduction
[1] This decision concerns an application for approval of the ADJ Contracting Pty Ltd Enterprise Agreement 2010-2014 (the ADJ Agreement). The application for approval was made by ADJ Contracting Pty Ltd (ADJ) under s.185 of the Fair Work Act 2009 (Cth) (the FW Act). The ADJ Agreement is not a greenfields agreement. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) has given a written notice, pursuant to s.183 of theFW Act, stating that it wants the ADJ Agreement to cover it.
[2] The application for approval of the ADJ Agreement was listed for hearing before me on 4 April 2011. At that hearing the Australian Industry Group (AIG) was given permission to intervene. The Australian Building and Construction Commissioner (ABCC) also appeared.
Approval of enterprise agreements
[3] Section 186 of the FW Act provides that if an application for approval of an enterprise agreement is made under s.185, Fair Work Australia (FWA) must approve the agreement if the requirements in ss.186 and 187 are met. Section 186(4) provides that FWA must be satisfied that the agreement does not include any unlawful terms.
[4] Section 194 relevantly provides that a term of an enterprise agreement is an unlawful term if it is:
“(a) a discriminatory term; or
(b) an objectionable term; or...
(e) a term that is inconsistent with a provision of Part 3-3 (which deals with industrial action); or
(f) a term that provides for an entitlement:
(i) to enter premises for a purpose referred to in section 481 (which deals with investigation of suspected contraventions); or
(ii) to enter premises to hold discussions of a kind referred to in section 484;
other than in accordance with Part 3-4 (which deals with right of entry); or
(g) a term that provides for the exercise of a State or Territory OHS right other than in accordance with Part 3-4 (which deals with right of entry).”
[5] Section 12 defines an objectionable term as a term that:
“(a) requires, has the effect of requiring, or purports to require or have the effect of requiring; or
(b) permits, has the effect of permitting, or purports to permit or have the effect of permitting;
either of the following:
(c) a contravention of Part 3-1 (which deals with general protections);
(d) the payment of a bargaining services fee.”
[6] Section 192 further provides that:
“192 When FWA may refuse to approve an enterprise agreement
(1) If an application for the approval of an enterprise agreement is made under section 185, FWA may refuse to approve the agreement if FWA considers that compliance with the terms of the agreement may result in:
(a) a person committing an offence against a law of the Commonwealth; or
(b) a person being liable to pay a pecuniary penalty in relation to a contravention of a law of the Commonwealth.
(2) Subsection (1) has effect despite sections 186 and 189 (which deal with the approval of enterprise agreements).
(3) If FWA refuses to approve an enterprise agreement under this section, FWA may refer the agreement to any person or body FWA considers appropriate.”
Objections to the application for approval
[7] The AIG and ABCC submitted the ADJ Agreement should not be approved because it contains unlawful terms and/or because compliance with some of its terms may result in ADJ committing an offence against a law of the Commonwealth or being liable to pay a pecuniary penalty in relation to a contravention of a law of the Commonwealth. The terms in issue are clauses 4.3(b), 15.2(k) and 16.6(b) and (d) of Parts A and B of the ADJ Agreement. The clauses are the same in each of the parts.
[8] I will deal in turn with these clauses and the objections to them.
Clause 4.3(b)
[9] Clause 4.3(b) of the ADJ Agreement is as follows:
“4.3 Security of Employment Arrangements ...
(b) Contractors
(i) Where the Employer makes a definite decision that it intends to engage contractors or labour hire companies to perform work covered by the Agreement, (which would ordinarily be undertaken by the employees), the Employer shall consult with the employees and their representatives, in accordance with this clause.
(ii) In the normal course, it is expected that consultation will occur within the 14 days leading up to the commencement of the work by the contractors / labour hire employees. If for any reason this does not occur, or if the Employer has less than 14 days’ notice of the need to commence the work, consultation will occur as soon as reasonably practicable - and in any case not more than 14 days after the contractors / labour hire employees commence work.
(iii) For the purpose of the consultation, the Employer must inform the employees and their representatives of:
(A) the name of the proposed contractor(s) / labour hire company;
(B) the type of work proposed to be given to the contractors(s) / labour hire company;
(C) the number of persons and qualifications of the persons the proposed contractor(s) / labour hire company may engage to perform the work; and
(D) the likely duration.
(iv) The Employer will consult with the employees and their representatives over the following issues:
(A) safety; and
(B) inductions and facilities for contractor and labour hire employees.
(v) The Employer shall only engage contractors and employees of contractors, to do work that would be covered by this Agreement if it was performed by the Employees, who apply wages and conditions that are no less favourable than that provided for in this Agreement. This will not apply where the Employer is contractually obliged by the head contractor / client to engage a specific nominated contractor to do specialist work.
(vi) This clause does not apply in respect of specialist contractors engaged by the Employer where the provisions of sub clause (v) are met. However, this exclusion will not be effective if the specialist contractor further sub-contracts any portions of the works for which it has been contracted by the Employer, unless otherwise agreed by the Employer and the Union.
(vii) In the event of a dispute about whether consultation has occurred under this clause, the employee or the Union may refer the matter to the Disputes Board to determine. Nothing in this clause will be taken to in any way limit, prevent or delay the commencement of work by contractors or employees, or provide justification for work to cease pending determination by the Disputes Board. Any commencement of work will not prejudice the outcome of the dispute. The Disputes Board’s determination shall be final and binding on the Parties (and there shall be no right of review by FWA in respect of such a decision).
(vii) No employee shall be made redundant whilst labour hire employees, contractors and/or employees of contractors, engaged by the Employer, are performing work that is or has been performed by the Employees on the particular site or project. This clause does not apply in respect of specialist contractors.”
[10] The concern of the AIG centres on clause 4.3(b)(v).
[11] The AIG maintains clause 4.3(b)(v) is an objectionable term and, therefore, an unlawful term for an enterprise agreement because it requires ADJ to contravene s.340(1) in Part 3-1 of the FW Act.
[12] The AIG maintains clause 4.3(b)(v) requires ADJ to contravene s.340(1) of the FW Act because it requires ADJ to refuse to engage or use a contractor who has an enterprise agreement or other workplace instrument providing less generous terms and conditions of employment than those in the ADJ Agreement. 1
[13] The AIG points out that s.340(1) of the FW Act provides that:
“340 Protection
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.”
[14] Section 341(1)(a) provides that:
“341 Meaning of workplace right
Meaning of workplace right
(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body...”
[15] A “workplace instrument” is defined in s.12 as an instrument made under, or recognised by, a workplace law and concerning the employment relationship. A “workplace law” is defined in s.12 as the FW Act, the Fair Work (Registered Organisations) Act 2009 (Cth), the Independent Contractors Act 2006 (Cth), or any other Commonwealth, State or Territory law regulating the employment relationship.
[16] Section 342(1) provides that a person who has entered into a contract for services with an independent contractor takes adverse action against the independent contractor if the person:
“(a) terminates the contract; or
(b) injures the independent contractor in relation to the terms and conditions of the contract; or
(c) alters the position of the independent contractor to the independent contractor’s prejudice; or
(d) refuses to make use of, or agree to make use of, services offered by the independent contractor; or
(e) refuses to supply, or agree to supply, goods or services to the independent contractor.”
[17] Section 342(1) also provides that a person proposing to enter into a contract for services with an independent contractor takes adverse action against the independent contractor if the person:
“(a) refuses to engage the independent contractor; or
(b) discriminates against the independent contractor in the terms or conditions on which the principal offers to engage the independent contractor; or
(c) refuses to make use of, or agree to make use of, services offered by the independent contractor; or
(d) refuses to supply, or agree to supply, goods or services to the independent contractor.”
[18] I consider the AIG’s concern that clause 4.3(b)(v) requires ADJ to contravene s.340(1) of the FW Act is unfounded. Clause 4.3(b)(v) requires ADJ to only engage contractors who apply wages and conditions no less favourable than those provided for in the ADJ Agreement. The clause is not concerned with whether or not an enterprise agreement or other workplace agreement covers the contractor.
[19] My conclusion in this respect is consistent with that of the Full Bench of FWA in Asurco Contracting Pty Ltd v Construction, Forestry, Mining and Energy Union 2 in dealing with a clause of similar effect to clause 4.3(b)(v). The Full Bench said:
“[12] Asurco also argues that the clauses in question contain unlawful content. It contends that the clause requires or permits the employer to refuse to engage an independent contractor because the independent contractor is entitled to the benefit of a workplace law or workplace instrument. We reject this argument. First the terms of an agreement cannot override the terms of the Act. Any objectionable term has no effect:
‘356 Objectionable terms
A term of a workplace instrument, or an agreement or arrangement (whether written or unwritten), has no effect to the extent that it is an objectionable term.’
[13] In any event, the obligation sought to be imposed on the employer is to require contractors to be paid, as a minimum, the amounts in the agreement applicable to employees. The existence of another enterprise agreement with higher or lower terms does not preclude any such obligation being observed, nor does it follow, as was submitted by Asurco, that such a provision would lead to a breach of the general protections provisions of the Act.”
[20] The AIG also submits ADJ’s compliance with clause 4.3(b)(v) would result in ADJ committing an offence against s.45E of the Competition and Consumer Act 2010 (Cth) (the CC Act).
[21] The AIG maintains this because:
(i) clause 4.3(b)(v) amounts to an arrangement or understanding between ADJ and the CEPU and at least one purpose of that arrangement or understanding is to prevent or hinder ADJ from acquiring services from existing contractors or labour hire companies who do not provide their employees with at least the wages and conditions in the ADJ agreement; and/or
(ii) ADJ’s compliance with clause 4.3(b)(v) is likely to lead ADJ to not engage contractors or labour hire companies who do not have industrial instruments acceptable to the CEPU.
[22] Section 45E of the CC Act is as follows:
“45E Prohibition of contracts, arrangements or understandings affecting the supply or acquisition of goods or services
Situations to which section applies
(1) This section applies in the following situations: ...
(b) an acquisition situation --in this situation, a person (the first person) has been accustomed, or is under an obligation, to acquire goods or services from another person (the second person)...
Prohibition in an acquisition situation
(3) In an acquisition situation, the first person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:
(a) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person; or
(b) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person, except subject to a condition:
(i) that is not a condition to which the acquisition of such goods or services by the first person from the second person has previously been subject because of a provision in a contract between those persons; and
(ii) that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services...
Meaning of accustomed to acquire
(7) In this section, a reference to a person who has been accustomed to acquire goods or services from a second person includes (subject to subsection (8)):
(a) a regular acquirer of such goods or services from the second person; or
(b) a person who, when last acquiring such goods or services, acquired them from the second person; or
(c) a person who, at any time during the immediately preceding 3 months, acquired such goods or services from the second person.
Exception to subsection (7)
(8) If:
(a) goods or services have been acquired by a person from a second person under a contract between them that required the first person to acquire such goods or services over a period; and
(b) the period has ended; and
(c) after the end of the period, the second person has refused to supply such goods or services to the first person;
then, for the purposes of the application of this section in relation to anything done after the second person has refused to supply goods or services as mentioned in paragraph (c), the first person is not to be taken to be a person who has been accustomed to acquire such goods or services from the second person.
Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(7A).”
[23] The AIG’s concerns about ADJ’s compliance with clause 4.3(b)(v) and s.45E of the CC Act can be readily dismissed.
[24] Section 45E is concerned with the making of certain contracts, arrangements or understandings between a person and a union, officer of a union or person acting on behalf of such an officer or union. It is not concerned with the person’s compliance with such contracts, arrangements or understandings. Accordingly, even if clause 4.3(b)(v) amounts to such a contract, arrangement or understanding, ADJ’s compliance with clause 4.3(b)(v) would not result in ADJ committing an offence against s.45E of the CC Act as compliance with such a contract, arrangement or undertaking, as opposed to making such a contract, arrangement or undertaking, is not an offence under s.45E.
[25] It can be added that given the terms of clause 4.3(b)(v), ADJ’s compliance with clause 4.3(b)(v) does not require them to not engage contractors or labour hire companies who do not have industrial instruments acceptable to the CEPU and the AIG’s assertion that it is likely to is without foundation.
[26] The ABCC maintains clauses 4.3(b)(v) and (vi) are objectionable terms because they permit a contravention of ss.354(1)(a)(iii) and/or 354(1)(b)(ii) in Part 3-1 of the FW Act.
[27] Section 354(1)(a)(iii) provides that a person must not discriminate against an employer because the employees of the employer are covered or not covered by an enterprise agreement that does or does not cover an employee organisation or a particular employee organisation.
[28] Section 354(1)(b)(ii) provides that a person must not discriminate against an employer because it is proposed that employees of the employer be covered by or not be covered by an enterprise agreement that does or does not cover an employee organisation or a particular employee organisation.
[29] The ABCC submits clauses 4.3(b)(v) and (vi) permit a contravention of ss.354(1)(a)(iii) or 354(1)(b)(ii) of the FW Act because they oblige ADJ, in general, not to engage a contractor that has, or a contractor that proposes to use a sub-contractor that has, an enterprise agreement which does not cover the CEPU but does cover relevant employees and provides for wages and conditions less than those in the ADJ Agreement.
[30] The ABCC stated concerns about clauses 4.3(b)(v) and (vi) can be dismissed. As earlier pointed out, the clauses are concerned with the wages and conditions paid by contractors and not with whether an enterprise agreement covers or does not cover a contractor.
[31] The AIG also maintains clause 4.3(b)(vii) is an objectionable term because it does not limit the Disputes Board’s actions in respect of a contractor, including excluding a contractor. This AIG objection can be dismissed given that a resolution by the Disputes Board does not establish the causal connections required for a contravention of Part 3-1 of the FW Act.
Clause 15.2(k)
[32] Clause 15.2 of the ADJ Agreement is as follows:
“15.2 Resolving Other Issues
(a) Where a dispute arises over permitted matters (as currently defined in the Fair Work Act), the application of this Agreement or the NES, the matter shall be first submitted by the Union, employee or Employee Representative (if any) to the supervising officer or another appropriate manager, or vice versa. If not settled, the matter may be referred to more senior persons.
(b) While this procedure is being followed the status quo that existed immediately prior to the events that gave rise to the dispute will remain and, subject to this, work shall continue normally where it is agreed that there is an existing custom and practice, but in other cases, the work shall continue at the instruction of the Employer. Failure to continue shall be a breach of the Agreement.
(c) No party shall be prejudiced as to the final settlement by the continuance of work in accordance with this subclause.
(d) If still not settled, either party may submit the matter, in accordance with this clause, to:
(i) the Disputes Board for conciliation and/or, arbitration; or
(ii) directly to FWA for conciliation and/or arbitration, or for a review of an arbitrated decision of the Disputes Board.
(e) To avoid doubt, a party to a dispute may:
(i) apply to FWA notwithstanding the fact that the Disputes Board has already conciliated the matter; or
(ii) if the Disputes Board has arbitrated the matter, apply to FWA for a review of the decision within 14 days of the decision having been made; or
(iii) elect to submit the matter directly to FWA without first going to the Disputes Board.
(f) If a matter is submitted to the Disputes Board:
(i) The decision of the Disputes Board is binding on the parties, subject to the right to review in accordance with this clause.
(g) Where a matter does progress to FWA for arbitration or review, its decision shall be final and binding on the parties, subject to either party exercising any right of appeal against the decision to a Full Bench.
(h) In conciliating or arbitrating a matter under this clause, or conducting an appeal under this clause, FWA may exercise such procedural and other powers in relation to conferences, hearings, witnesses, evidence and submissions as are necessary to make the conciliation, arbitration, arbitration hearing, or review effective. To avoid doubt, in conducting a review, FWA is not confined to a consideration of the materials before the Disputes Board, and may deal with the matter afresh or conduct any hearing afresh and substitute its decision for that of the Disputes Board. In conducting a review, it is not necessary for FWA to determine whether the decision of the Disputes Board was affected by error.
(i) A decision of the Disputes Board or FWA made pursuant to this clause 15.2 must not be inconsistent with the National Code of Practice for the Construction Industry, the Implementation Guidelines for the National Code of Practice for the Construction Industry or legislative obligations.
(j) For the purposes of the disputes procedure:
(i) At all stages of this procedure, those involved in the dispute may seek the assistance of the Union, an employee representative, Employer representative (if any) and/or other representative.
(k) An Employee Representative or an official of the ETU shall be allowed to enter the workplace (excluding residential premises) to assist with representing an employee(s) under the dispute resolution clause in this Agreement provided that:
(i) prior to seeking entry:
(A) a dispute has been submitted to the Employer in accordance with clause 15.2(a) notifying the Employer of the nature of the dispute (as far as practicable), and which employees are affected (as far as practicable);
(B) a person involved in the dispute has sought the assistance of the representative (or official); and
(C) the parties have discussed mutually convenient arrangements for the entry, having regard to the operational requirements of the workplace;
(ii) the entry must not be used for any other purpose; and
(iii) the representative must not intentionally hinder or obstruct any person, or otherwise act in an inappropriate manner (which does not include actions involved in assisting the relevant employees in respect of the dispute), during the attendance or entry (or the representative has previously been found by FWA or the Disputes Board to have so acted in respect of that dispute).
Without limiting the rights or obligations of the parties in relation to a breach of this Agreement, any dispute about entry to the workplace will be dealt with in accordance with this procedure. For the avoidance of doubt, clause 15.2(b) will apply while the procedure is followed.”
[33] The AIG and ABCC maintain clause 15.2(k) is an unlawful term as it purports to permit right of entry other than in accordance with Part 3-4 of the FW Act. In this regard, they submit the clause is inconsistent with Part 3-4 because:
(a) it does not require that the representative be a permit holder and so permits persons without permits to enter the employer’s premises;
(b) it does not require the representative to give an entry notice or exemption certificate at least 24 hours (but no more than 14 days) before the entry, and so permits entry at any time without written notice;
(c) it does not require production of authority documents;
(d) it enables entry and discussions outside working hours and meal breaks; and
(e) it prevents FWA from dealing with a right of entry dispute under Subdivision A of Division 5 of Part 3-4, or limits FWA’s role and powers under those provisions and a person’s right to apply to FWA to deal with such a dispute.
[34] A right of entry clause in an enterprise agreement was considered by a Full Bench of FWA in Australian Industry Group v Pacific Brand Limited t/a Dunlop Foams 3 (the Dunlop Foams’ case).
[35] It is convenient to set out the Full Bench’s reasoning in that case. The Full Bench said:
“The statutory provisions
[2] Sections 185 and 186 of the Fair Work Act specify the requirements for approval of an enterprise agreement. We are concerned in this appeal with only one of those requirements, the one specified in s.186(4). Section 186(4) provides:
‘(4) FWA must be satisfied that the agreement does not include any unlawful terms (see Subdivision D of this Division).’
[3] The meaning of the expression ‘unlawful term’ is dealt with in s.194. The relevant paragraph in this case is s.194(f). It reads:
‘194 Meaning of unlawful term
A term of an enterprise agreement is an unlawful term if it is:
… ...
(f) a term that provides for an entitlement:
(i) to enter premises for a purpose referred to in section 481 (which deals with investigation of suspected contraventions); or
(ii) to enter premises to hold discussions of a kind referred to in section 484;
other than in accordance with Part 3-4 (which deals with right of entry)’
[4] Part 3-4 of the Fair Work Act is entitled Right of Entry. It deals with the rights of an official of an organisation who holds a permit to enter premises for purposes related to their representative role under the Fair Work Act and for other purposes. The relevant provisions of Part 3-4 are ss.481 and 484. It is desirable to set those sections out. Section 481 deals with entry onto premises to investigate a suspected contravention. It reads:
‘481 Entry to investigate suspected contravention
(1) A permit holder may enter premises and exercise a right under section 482 or 483 for the purpose of investigating a suspected contravention of this Act, or a term of a fair work instrument, that relates to, or affects, a member of the permit holder’s organisation:
(a) whose industrial interests the organisation is entitled to represent; and
(b) who performs work on the premises.
(2) The fair work instrument must apply or have applied to the member.
(3) The permit holder must reasonably suspect that the contravention has occurred, or is occurring. The burden of proving that the suspicion is reasonable lies on the person asserting that fact.
Note: A permit holder who seeks to exercise rights under this Part without reasonably suspecting that a contravention has occurred, or is occurring, is liable to be penalised under subsection 503(1) (which deals with misrepresentations about things authorised by this Part).’
[5] Section 481(1) provides that a permit holder may enter premises for the purpose of investigating suspected contraventions of workplace laws, subject to some conditions. Section 484 provides that a permit holder may enter premises for the purposes of holding discussions with employees, also subject to some conditions. It reads:
‘484 Entry to hold discussions
A permit holder may enter premises for the purposes of holding discussions with one or more employees or TCF outworkers:
(a) who perform work on the premises; and
(b) whose industrial interests the permit holder’s organisation is entitled to represent; and
(c) who wish to participate in those discussions.’
[6] It follows from the operation of ss.186(4) and 194(f) that before approving an enterprise agreement Fair Work Australia must be satisfied that the agreement does not include a term that provides for an entitlement to enter premises for a purpose referred to in s.481 or to hold discussions of a kind referred to in s.484 other than in accordance with Part 3-4 of the Fair Work Act.
The agreement term
[7] The agreement for which Dunlop Foams sought approval in this case contained a provision dealing with right of entry. The provision reads:
‘44 Right of Entry
An authorised NUW representative is entitled to enter at all reasonable times upon premises and to interview any employee, but not so as to interfere unreasonably with the Employer’s business.’
[8] It can be seen that cl.44 entitles an authorised representative of the National Union of Workers (NUW), a registered organisation of employees, to enter Dunlop Foams’ premises at all reasonable times to interview employees but not so as to interfere unreasonably with the employer’s business. The question which arises is whether cl.44 is an unlawful term within the meaning of s.194(f). Commissioner Ryan found that it is not. AiGroup contends that the Commissioner’s decision is wrong and that cl.44 purports to provide an entitlement to enter premises for a purpose referred to in s.481 or to hold discussions of a kind referred to in s.484, other than in accordance with Part 3-4...
Conclusions
[28] It is desirable to give an indication of the content of Part 3-4. The part is entitled ‘Right of Entry’ It contains some 49 sections, arranged in 6 divisions as follows:
Division 1—Introduction
ss.478 – 480
Division 2—Entry rights under this Act
ss. 481 – 493
Division 3—State or Territory OHS rights
ss.494 – 499
Division 4—Prohibitions
ss. 500 – 504
Division 5—Powers of FWA
ss.505 – 511
Division 6—Entry permits, entry notices and certificates
ss.512 – 521
[29] Section 481 is in Division 2 of Part 3-4. It is part of Subdivision A which is entitled ‘Entry to investigate suspected contravention’. There are 4 sections in the subdivision, of which s.481 is the first. These sections deal in some detail with what a permit holder may or may not do in relation to entry, inspection and documents in connection with a suspected contravention of the Fair Work Act or a term of a fair work instrument. Section 484 is also in Division 2 of Part 3-4 and is the only section in Subdivision B. Subdivision B is entitled ‘Entry to hold discussions’.
[30] Subdivision C of Division 2 of Part 3-4 is entitled ‘Requirements for permit holders’. It contains 8 sections regulating the times at which and manner in which permit holders may enter particular premises. Section 486 provides, relevantly, that Subdivisions A and B do not authorise a permit holder to enter or remain on premises or exercise any other right if he or she contravenes Subdivision C in exercising that right.
[31] Division 4, as its name suggests, contains a number of prohibitions in relation to the exercise of rights by a permit holder. The prohibitions deal with hindering or obstruction by or of a permit holder, refusal or delaying the entry of a permit holder, misrepresentations and unauthorised use or disclosure of information obtained, relevantly, on entry to investigate a suspected contravention.
[32] Division 6 regulates the issue of entry permits and the giving of entry notices. It is not necessary to deal with those provisions in any detail.
[33] This summary of the legislative provisions indicates that the Fair Work Act regulates the exercise of entry rights by a permit holder in a comprehensive way. There cannot be any doubt that if cl.44 had been drafted so as to apply to a permit holder it would have been clearly inconsistent with the regime established by Part 3-4. It should be noted, however, that s.194(f) does not strike at agreement terms which deal with a permit holder as such, but at agreement terms which deal with an entitlement relating to particular types of entry to premises.
[34] In order to be an unlawful term within s.194(f) an agreement term must have three elements. The agreement term must provide for an entitlement, the entitlement must be to enter premises for a purpose referred to in s.481 or to hold discussions of a kind in s.484 and the term must purport to permit entry other than in accordance with Part 3-4.
[35] We have no doubt that cl.44 provides for an entitlement. Subject to compliance with the prescribed conditions an authorised NUW representative may enter the premises at any time. Provided the conditions are complied, with there is nothing that Dunlop Foams can do to prevent or restrict entry. It is also clear that the entitlement, being unrestricted by reference to purpose, includes entry for the purpose referred to in s.481, namely investigation of suspected contraventions. Equally the entitlement extends to the holding of discussions with employees, the matter dealt with in s.484. Finally it is clear that cl.44 is not limited in its operation by reference to the provisions of Part 3-4. As we have seen, those provisions establish a regime of regulation of entry to premises based on the requirement to obtain a permit and to observe a number of procedures and rules.
[36] With respect to the Commissioner, in our view the conclusion that cl.44 is not an unlawful term is wrong. The decision approving the agreement must be quashed.
[37] Some of the submissions dealt with the legal effect of Part 3-4 in relation to the general law concerning entry to premises. Because this appeal is concerned with the application of s.186(4) and the effect of s.194(f) in relation to the terms of an enterprise agreement, it is unnecessary to deal with those submissions.
[38] The only remaining question is whether the defect in the agreement can be cured by an undertaking pursuant to s.190. Where the tribunal has a concern that an agreement does not meet the requirements in s.186, s.190(2) provides that the agreement may nevertheless be approved if an undertaking given under s.190(3) meets the concern. Section 190 provides as follows:
‘190 FWA may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of an enterprise agreement has been made under section 185; and
(b) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern.
Undertakings
(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.
FWA must seek views of bargaining representatives
(4) FWA must not accept an undertaking under subsection (3) unless FWA has sought the views of each person who FWA knows is a bargaining representative for the agreement.
Signature requirements
(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.’
[39] Section 190(3) provides for undertakings by employers. Subject to what we say in the next paragraph we would be prepared to accept a written undertaking from Dunlop Foams that the exercise of any right of entry conferred by cl.44 of the agreement which involves entry to premises for a purpose referred to in s.481 of the Fair Work Act or to hold discussions of a kind referred to in s.484 of the Fair Work Act will be in accordance with the requirements of Part 3-4 of Chapter 3 of the Fair Work Act. If Dunlop Foams is prepared to give such an undertaking, the undertaking should be in accordance with Regulation 2.07 of the Fair Work Regulations, filed in Fair Work Australia and served on the NUW.
[40] We are required by s190(4) to seek the views of each person who is a known bargaining representative for the agreement before deciding whether to accept an undertaking. Within 7 days of receipt of the written undertaking of Dunlop Foams the NUW is directed to file in Fair Work Australia and serve on Dunlop Foams its views concerning whether we should accept the undertaking. Should Dunlop Foams provide the undertaking, and, having considered any views of the NUW we decide to accept the undertaking, we are prepared to approve the agreement.” (Underlining added.)
[36] In my view, the terms of clause 15.2(k) are clearly different to those considered by the Full Bench in the Dunlop Foams’ case. Setting aside the last paragraph of clause 15.2(k) concerning a dispute about entry to the workplace, to which I will return shortly, the clause provides for an employee representative or an official of the CEPU to enter a workplace to assist with representing an employee under the dispute resolution clause of the ADJ Agreement. The clause provides that the entry must not be used for any other purpose.
[37] Accordingly, I am satisfied clause 15.2(k), excluding the last paragraph of the clause, is not an unlawful term within the meaning of s.194(f) or s.194(g). While the clause provides for an entitlement, the entitlement is to enter premises for the purpose of representing an employee under the dispute resolution clause of the ADJ Agreement and not for either a purpose referred to in s.481 or to hold discussions of a kind referred to in s.484 or for the exercise of a State or Territory OHS right.
[38] I am concerned, however, that the last paragraph of clause 15.2(k) provides for any dispute about entry to the workplace to be dealt with in accordance with clause 15, rather than in accordance with Division 5 of Part 3-4 of the FW Act where the dispute is about the operation of Part 3-4. I will return later to whether it is appropriate for me to accept a written undertaking from ADJ in respect of the last paragraph of clause 15.2(k).
Clauses 16.6(b) and (d)
[39] Clause 16.6 of the ADJ Agreement is as follows:
“16.6 Union recognition
(a) Collective industrial relations will continue as a fundamental principle of the Employer.
(b) Union membership shall be promoted by the Employer to all prospective and current Employees.
(c) To ensure all new employees properly understand their rights under this Agreement, the Shop Steward shall, as part of the official induction program, be allowed to explain to the new employees how the terms of this Agreement operate and benefit the Employees.
(d) The employees who are members of the ETU shall be encouraged to participate in Union meetings and exercise their democratic rights.”
[40] The AIG maintains clauses 16.6(b) and (d) are objectionable terms because they require, or have the effect of requiring, or permit, or have the effect of permitting, or purport to require or permit, or purport to have the effect of requiring or permitting, ADJ to induce its prospective and/or current employees to engage in membership action and thereby contravene s.350 in Part 3-1 of the FW Act.
[41] Section 350 provides that:
“350 Inducements—membership action
(1) An employer must not induce an employee to take, or propose to take, membership action...
(3) A person takes membership action if the person becomes, does not become, remains or ceases to be, an officer or member of an industrial association.”
[42] Clause 16.6(b) requires ADJ to promote union membership to all of its prospective and current employees. Clause 16.6(d) requires someone to encourage employees of ADJ who are members of the CEPU to participate in union meetings and exercise their democratic rights.
[43] I am prepared to assume clause 16.6(d) requires ADJ to encourage its employees who are CEPU members to participate in union meetings, etc. I am also prepared to assume encouraging those employees to participate in union meetings, etc is to encourage union membership.
[44] However, I am satisfied clauses 16.6(b) and (d) do not require, etc ADJ to contravene s.350 of the FW Act. This is because I am satisfied the word “induce” in s.350 does not mean “promote” or “encourage”.
[45] In this regard, I note that s.350 is similar to s.794 of the Workplace Relations Act 1996 (Cth) (the WR Act) after its amendment by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (the Work Choices Act). Section 794 was as follows:
“794 Inducements to cease membership etc. of industrial associations etc.
(1) An employer, or a person who has engaged an independent contractor, must not (whether by threats or promises or otherwise) induce an employee, or the independent contractor, as the case requires:
(a) to become an officer or member of an industrial association; or
(b) to remain an officer or member of an industrial association; or
(c) not to become an officer or member of an industrial association; or
(d) to cease to be an officer or member of an industrial association.
(2) Subsection (1) is a civil remedy provision.”
[46] Section 794 was contained in Part 16 - Freedom of Association of the then WR Act. Part 16 also contained ss.810 and 811. Sections 810 and 811 were as follows:
“810 Meaning of objectionable provision
(1) For the purposes of this Division, each of the following provisions (however it is described in the document concerned) is an objectionable provision:
(a) a provision that requires or permits any conduct that would contravene this Part, or that would contravene this Part if Division 2 were disregarded;
(b) a provision that directly or indirectly requires a person:
(i) to encourage another person to become, or remain, a member of an industrial association; or
(ii) to discourage another person from becoming, or remaining, a member of an industrial association;
(c) a provision that indicates support for persons being members of an industrial association;
(d) a provision that indicates opposition to persons being members of an industrial association;
(e) a provision that requires or permits payment of a bargaining services fee to an industrial association.
(2) For the purpose of determining whether a provision is an objectionable provision, it does not matter whether that provision is void because of section 811.
(3) In this section:
permits includes:
(a) purports to permit; and
(b) has the effect of permitting; and
(c) purports to have the effect of permitting.
requires includes:
(a) purports to require; and
(b) has the effect of requiring; and
(c) purports to have the effect of requiring.
811 Objectionable provisions etc. in industrial instruments etc.
(1) A provision of an award is void to the extent that it is an objectionable provision.
(2) A provision of an industrial instrument, or an agreement or arrangement (whether written or unwritten), is void to the extent that it requires or permits, or has the effect of requiring or permitting, any conduct that would contravene this Part.”
[47] Section 810(1)(a) of the then WR Act, therefore, made a provision that required or permitted any conduct in contravention of s.794, concerning conduct to induce union membership, an objectionable provision. And, s.810(1)(b) of the then WR Act made a provision that directly or indirectly required a person to encourage union membership an objectionable provision.
[48] Thereby the then WR Act clearly differentiated between “inducing” union membership and “encouraging” union membership. The Macquarie Dictionary defines “promote” as meaning “encourage”.
[49] While a provision similar to s.810(1)(b) of the then WR Act is not contained in the FW Act, I can see no sound reason for concluding s.350 of the FW Act extends to encouraging or promoting union membership.
[50] In support of so concluding the AIG refers to the Explanatory Memorandum to the Fair Work Bill 2009. In respect of its clause 356, the Explanatory Memorandum stated that “[c]lause 356 provides that a term of a workplace instrument, or an agreement or arrangement... has no effect to the extent that it is an objectionable term. It is intended to broadly cover s.811(2) of the WR Act. Objectionable term is defined in clause 12...”. 4 (Underlining added.) However, I am not persuaded this reference in the Explanatory Memorandum to intending to “broadly cover subsection 811(2) of the WR Act” is sufficient to conclude that the equivalent of s.810(1)(b) or encouraging union membership is now embraced within inducing union membership in s.350. Indeed, it is arguable that s.811(2) did not cover s.810(1)(b) of the then WR Act as s.811(2), unlike s.811(1), did not refer to an objectionable provision. Moreover, in respect of clause 350 of the Fair Work Bill 2009, the Explanatory Memorandum stated that “[c]lause 350 is intended to broadly cover section 794 of the WR Act.”5
[51] Further, another part of the Explanatory Memorandum to the Fair Work Bill 2009 gave the following as falling within the scope of permitted matters for an enterprise agreement:
- “ terms that provide for employees to have paid time off to attend union meetings or participate in union activities; ...
- terms that require an employer to provide information to a union about employees who are covered by an enterprise agreement or information about a union to an employee”. 6
[52] Accordingly, I consider s.350 of the FW Act does not extend to encouraging or promoting union membership. The AIG’s concern that clauses 16.6(b) and (d) are objectionable terms because they require, etc ADJ to contravene s.350 can be dismissed.
[53] The ABCC’s support for the AIG’s contention in respect of clause 16.6(b) can be similarly dismissed. In respect of clause 16.6(d), the ABCC submits that, to the extent it is inconsistent with provisions in Part 3-3 of the FW Act concerning industrial action, an undertaking ought be sought from ADJ that the provision is not intended to modify or qualify the rights and obligations of employees covered by the ADJ Agreement in relation to the taking of industrial action as set out in Part 3-3 of the FW Act.
[54] In my view the ABCC’s concern about clause 16.6(d) can also be dismissed. Clause 16.6(d) refers to CEPU members participating in union meetings and exercising democratic rights and presumably ADJ encouraging as much. “Industrial action” is defined in s.19 of the FW Act and its meaning does not extend to the conduct covered by clause 16.6(d).
Conclusion
[55] For the foregoing reasons, with one exception, I reject the concerns of the AIG and ABCC about clauses 4.3(b), 15.2(k) and 16.6(b) and (d) of the ADJ Agreement. The one exception concerns the last paragraph of clause 15.2(k).
[56] As earlier indicated, s.190 of the FW Act provides that FWA may approve an agreement with undertakings. ADJ has previously given me some written undertakings in respect of clause 5 of Part C and Appendix A of the ADJ Agreement and the CEPU as a bargaining representative has previously indicated I should accept those undertakings.
[57] I would be prepared to approve the ADJ Agreement:
(i) if ADJ gives a further written undertaking in accordance with Regulation 2.07 of the Fair Work Regulations 2009 that any dispute about right of entry to the workplace for a purpose referred to in s.481 of the Fair Work Act 2009 (Cth) or to hold discussions of a kind referred to in s.484 of the Fair Work Act 2009 (Cth) or for the exercise of a State or Territory OHS right, will be dealt with in accordance with Part 3-4 of the Fair Work Act 2009 (Cth);
(ii) if ADJ both files that undertaking in FWA and serves it on the CEPU as a bargaining representative for the employees covered by the ADJ Agreement within seven days of this decision; and
(iii) if within seven days of receipt of the written undertaking the CEPU as a bargaining representative files in FWA and serves on ADJ their acceptance of the further written undertaking.
[58] I am satisfied the written undertakings previously given and such a further written undertaking is not likely to cause financial detriment to any employee covered by the ADJ Agreement or result in substantial changes to the ADJ Agreement.
[59] With such written undertakings I would be satisfied in respect of the requirements for approval of the ADJ Agreement.
SENIOR DEPUTY PRESIDENT
Appearances:
G Borenstein with K Reidy for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.
P Green of the National Electrical Contractors Association for ADJ Contracting Pty Ltd.
B Mueller of Counsel for the Australian Building and Construction Commissioner.
S Wood of Counsel with J Tracey of Counsel for the Australian Industry Group.
Hearing details:
2011.
Melbourne:
April 4.
Final written submissions:
Australian Industry Group, 6 April 2011.
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, 13 April 2011.
1 Exhibit AIG1 at paragraph 24.
2 [2010] 197 IR 365.
3 [2010] FWAFB 4337, 11 June 2010.
4 Explanatory Memorandum to the Fair Work Bill 2009 at paragraph 1445.
5 Ibid at paragraph 1413.
6 Ibid at paragraph 676.
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